First time investors missing out on cash flow benefits

First time investors missing out on cash flow benefits

With Australian property investors now spending more than $10 billion each month on buying established homes, it is critical that they boost their cash flow through claiming the generous tax benefits associated with owning investment property.

Confidence in the Australian property market continues to remain high with growing levels of activity by property investors throughout the country.

This activity by property investors is underlined by the latest investment housing figures released by the ABS. Figures for June 2014 show that lending to purchase established homes in Australia for investment purposes totaled $10.25 billion – a rise of $2.23 billion compared to June 2013.

Overall, 2014/2015 is shaping up to be one of the most positive financial years for the property investment market in Australia during recent times.

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We are now living in an environment of low interest rates and property investors can look with some confidence to very competitive borrowing costs during the coming financial year with a number of major lenders recently dropping their five-year fixed interest rates to less than five per cent.

These very low interest rates, combined with high rental returns, means that property is now emerging as a blue chip investment choice for many Australians.

During the last six months, we have recorded the emergence of a growing number of new first-time property investors who have not bought an investment property before.

These first-time, new investors are now a major factor in the current upswing in property investment lending highlighted by the latest ABS figures.

With Australian property investors now spending more than $10 billion each month on buying established homes, it is critical that they boost their cash flow through claiming the generous tax benefits associated with owning investment property.

For example, one of the most common mistakes that first-time investors make is not to claim their full tax depreciation benefits associated with owning an investment property.

Many of these first-time property investors fail to understand that the tax benefits from depreciation can be just as important as rental income and that tax benefits obtained through depreciation can be equivalent to 60 per cent of the total purchase price of the property.

A large proportion of these tax benefits are never claimed, which means that each year hundreds of millions of dollars in tax benefits are lost by investors not claiming their legitimate entitlements.

Property investors can fully maximise these depreciation benefits by obtaining a depreciation report of their investment property from a member of The Australian Institute of Quantity Surveyors (AIQS).